I don't understand why the stock market is climbing.

[afterburn 549]

just wait ill the end of Sept.....................................

[m21sniper]

Originally Posted by jyl

Refer to the Economy In Charts thread. Leading indicators are rising, earnings estimates are rising, companies have cut costs hard, labor is cowed, inflation is nowhere. Valuations in Oct and Mar were at grossly low levels. For example, retailers were trading at valuations similar to 1933, depth of Great Depression. And we didn't have a Great Depression this time.

Actually i think we really did, and really do.

The debt this nation faces is other-worldly, and eventually Death himself is going to come a collectin'.

I think that when you view our situation realistically and take into account our massive debt and the long term consequences of that, that this last recession was just a small pre-quake tremor.

[Rich76_911s]

Originally Posted by jyl

Valuations in Oct and Mar were at grossly low levels.

That is true but is it the case today?

I think most people would agree that the March lows were pricing in a complete market collapse.

But are todays valuations getting a bit lofty for the NEW economy going forward? Certainly the cheap easy money is not as accessible as it once was, at least to the general public. Since the consumer is 70% of the economy how great can we do?

Take this article for example on the housing market:
No Easy Exit for Government as Housing Market's Savior - WSJ.com

I have to figure that without government support housing prices could fall another 10 to 15% easily. It just seem to be that the real economy can't stand on its own legs. Yet people are buying stocks like everything is fine and dandy. Look at wells fargo. This is a bank in some serious trouble, and it is up to $30 a share. People are buying stuff without having a clue as to what they are getting into.

That is not even touching on the absolute irrational exuberance surrounding AIG. Unless the government just abolishes their debts this is a company that is selling assets just to pay interest costs. Yet people are out bidding the company up every day.

To me it seems like the cake is baked and everyone is just waiting for the frosting.

But I have been wrong before, and irrationality can last a long long long time.

(not trying to be argumentative, I am just asking what it is that has everyone so excited, cause I don't see it)

[Porsche-O-Phile]

Originally Posted by m21sniper

Actually i think we really did, and really do.

The debt this nation faces is other-worldly, and eventually Death himself is going to come a collectin'.

I think that when you view our situation realistically and take into account our massive debt and the long term consequences of that, that this last recession was just a small pre-quake tremor.

+1

Eventually the ROW is going to start asking the question, "why the hell should we bust our asses in sweatshops 18 hours a day for pennies, when we're the ones actually PRODUCING".

Ever see "A Bug's Life"? Why do you think the grasshoppers (the U.S. and west) are afraid of the ants (Asia, India, etc.) figuring out that they out-produce them 100-to-1 and outnumber them by 1,000-to-1?

I just don't see how the western world thinks we're going to "correct" out of this and everyone's going to be just fine with going back to the status quo where we consume 95% of the world's resources. There has been a paradigm shift. This recession is only the beginning evidence that things are not going to sustain themselves long term - certainly not in the way it has in the last 2-3 generations.

We have really painted ourselves into a corner as a nation. We've frittered away our manufacturing clout and our industrial power, we've squandered many of our resources and we still "expect" to be able to live like kings on the backs of the slave-labor practices of the rest of the world, while producing very little real value ourselves. This simply can't continue.

I've said this at least a hundred times in other posts - the notion that we can somehow "bring up" the rest of the world through artificially creating "better" societies (normally attempted through legislation) is a myth. We can't. We will be dragged down by 1,000 feet for every one foot we can "pull up" the rest of the world. We're hopelessly outnumbered by third world nations' populations and crushing poverty, and we can't escape the fundamentally disproportionate allocation of resources that has existed for the last couple of generations.

The party's over. The U.S. is heading down the one-way road to third-world oblivion.

[Rich76_911s]

Originally Posted by JasonF

1. Everyone is bearish (including those posting on this thread).

A lot of people here were bearish back when the dow peaked too. It is just tough, because you can be correct in a real sense, but wrong when dealing with the irrationality of Mr. Market.


Heck the guy who owns this company was shorting banks, and publicly announcing it.

[tabs]

Originally Posted by jyl

Refer to the Economy In Charts thread. Leading indicators are rising, earnings estimates are rising, companies have cut costs hard, labor is cowed, inflation is nowhere. Valuations in Oct and Mar were at grossly low levels. For example, retailers were trading at valuations similar to 1933, depth of Great Depression. And we didn't have a Great Depression this time.

1+

1. Rebound from panic selling...another 15% to go

2. Lack of alternative investment vehicles, which includes the weakening value of the USD and all that it entails.

3. Institutional buying is what drives the market and not the retail market player.

4. Only an idiot would listen to the chatter, except for the sentiment expressed.


Quiet frankly most of you Boyz are clueless, you might as well be gambling in Vegas.

If you BOyz watched the Market everyday for 20 years you would get a feel for its direction. right now it wants to go UP.

I never left the market, and I was shytin in my pants...

[einreb]

Originally Posted by tabs

1+

2. Lack of alternative investment vehicles, which includes the weakening value of the USD and all that it entails.

corporate bond yields/values were bringing in ridiculous money because of the perceived (real or not) risk. lots of that money has been moving back into equities.

-b

[jyl]

I think one disconnect is that a lot of the bears are talking about things that will play out, if they ever do, over a fairly long period of time. Not a year or three, more like a decade or more likely multiple decades.

Those long-term bear scenarios have only limited impact on the stock market's moves "right now".

You think the USD will collapse into hyperinflation and the CNY or gold will take over as the world's primary reserve currency? Fine - but are you predicting it will happen in the next ten years?

"Eventually" and "someday" aren't very useful.

[Porsche-O-Phile]

If healthcare nationalization gets passed, the markets will crash.

If war escalates in Afghanistan or starts in Iran, the markets will crash.

If the commercial RE market declines start resulting in the rampant foreclosures and bank failures a lot of analysts are predicting, the markets will crash.

If FDIC goes insolvent (it could), the markets will crash.

If the 4Q numbers are as bad as most people think they're going to be, the markets will crash.

If the 1Q/2010 numbers show a rash of new layoffs (they will), the markets will crash.

If China stops buying treasury bills, the markets will crash.

A lot can go wrong - certainly a lot more likelihood of stuff going wrong rather than going right in the coming months. Yes, the markets "want" to go up (people are sick of being depressed about this stuff and are looking for silver linings), but it is completely irrational. And FWIW I think we're past the point where payroll cuts (layoffs) are going to make investors feel good. Up to a point, yes - it makes sense that an individual company pares down its operating costs which results in increased profit margins, which helps the stock price. This is Stocks 101. However, we're now hovering around 18% (actual) unemployment. At some point, even the "individual company" investor is going to stop looking at job cuts as a good thing and look at it as destruction of the potential customer base.

The job numbers are not getting better anytime soon. It's anybody's guess as to how much worse they're going to get, or if the "tipping point" I describe above will be reached before any sort of perceptible turnaround. If it doesn't, it has the potential to be a HUGE confidence buster.

I just don't see how the market climbs can sustain themselves, even in the short term. We do not have a 10,000 DOW right now. You can cite all the flowery "recovery" talk you want. It doesn't change the reality that we still have very, very serious underlying problems in our economy and NONE of them has been solved in the last 10-18 months. Sooner or later, this reality will override any Polyannaish sentiment.

[tabs]

Originally Posted by Porsche-O-Phile

If healthcare nationalization gets passed, the markets will crash.

If war escalates in Afghanistan or starts in Iran, the markets will crash.

If the commercial RE market declines start resulting in the rampant foreclosures and bank failures a lot of analysts are predicting, the markets will crash.

If FDIC goes insolvent (it could), the markets will crash.

If the 4Q numbers are as bad as most people think they're going to be, the markets will crash.

If the 1Q/2010 numbers show a rash of new layoffs (they will), the markets will crash.

If China stops buying treasury bills, the markets will crash.

A lot can go wrong - certainly a lot more likelihood of stuff going wrong rather than going right in the coming months. Yes, the markets "want" to go up (people are sick of being depressed about this stuff and are looking for silver linings), but it is completely irrational. And FWIW I think we're past the point where payroll cuts (layoffs) are going to make investors feel good. Up to a point, yes - it makes sense that an individual company pares down its operating costs which results in increased profit margins, which helps the stock price. This is Stocks 101. However, we're now hovering around 18% (actual) unemployment. At some point, even the "individual company" investor is going to stop looking at job cuts as a good thing and look at it as destruction of the potential customer base.

The job numbers are not getting better anytime soon. It's anybody's guess as to how much worse they're going to get, or if the "tipping point" I describe above will be reached before any sort of perceptible turnaround. If it doesn't, it has the potential to be a HUGE confidence buster.

I just don't see how the market climbs can sustain themselves, even in the short term. We do not have a 10,000 DOW right now. You can cite all the flowery "recovery" talk you want. It doesn't change the reality that we still have very, very serious underlying problems in our economy and NONE of them has been solved in the last 10-18 months. Sooner or later, this reality will override any Polyannaish sentiment.

Perverse isn't it? But never the less true...the SM is rising and is going to keep rising as it has become disconnected from the fortunes of average Americans. They are simply going to be left beihind in the global economy. Cash for clunkers before very long almost evey Ameican isgoing to be driving a CLUNKER...

[Nathans_Dad]

Here's the problem with trying to time the market. You never know when to get back in.

Personally I never left the market. I rode it all the way down and kept buying as it fell. Of course, my time horizon is 30 years so I looked at this downturn as my golden opportunity to put money away when prices were cheap.

I made a few good trades, I bought Ford stock at $3, sold it at $6. Then I bought GE at $10 and still have it at $17.

The market will probably keep going up short term, then move sideways for a bit until the next move up. Unfortunately those who have sat on the sidelines have missed a 40% move. Getting back in now is probably the right thing to do, but you missed your chance to really catch the upswing.

That's the problem with market timing, it never seems like the right time to jump back in until the move has already happened. If you look at the people who really make money in the market, none of them are market timers. Market timing is just another form of gambling.

[island_dude]

I took a pause to keep from taking a bath in the market. I got back in some place not far from the bottom. As a result, I am nearly whole again. I don't see a bear market coming soon. Don't let your political view blind you to the reality. Everything got beat and there are lots of bargains out there and lots of cash wanting to chase them. Lets talk in six months and see, but I am in the market is its doing fine for me. I expect the growth to slow a bit, but this working out fine for me. Your mileage will vary.

[dan88911]

The market is a forward measuring indicator its 6 to 9 months a head of the economy. The same with the federal reserve actions takes 6 to 9 months to see effects. In spite of our deficit spending and this political fight on health care america is still considered the most stable country in the world.